Payroll

Tax Information For
International Visitors (Graduate Assistants & Students)
Michigan State University

The following is a summary of general tax obligations for international visitors. For a more complete explanation of tax rules, consult IRS Publication 519, U.S. Tax Guide for Aliens.

Residence Status for Tax Purposes
If you are not a U.S. citizen, your U.S. tax obligations depend on your "residence status for tax purposes". The Internal Revenue Service (IRS), the tax-collecting agency of the U.S. government, refers to non-U.S. citizens as "aliens". According to the IRS, you are either a "Resident alien" or a "Non-resident" alien for tax purposes. If it is determined that you are a resident alien for tax purposes, you are subject to all taxes in the same manner as a U.S. Citizen. Those taxes include Federal Income tax, FICA tax, Medicare tax, the State of Michigan income tax and possibly a local city tax.

Federal Income Tax-Withholding
The process of deducting taxes from wages is called "Income Tax-Withholding". Tax withholding is required by IRS. The rules governing how much tax (if any) the University is required to withhold are based on several factors: (1) your residence status for tax purposes, (2) IRS regulations, (3) information you furnish on tax forms.

Nonresident Alien Withholding
nonresident alien employees must follow special instructions when completing the IRS Form W-4. According to IRS regulations, a non-resident alien for tax purposes can claim the following for federal tax withholding;

Single (S) status (regardless of actual marital status);

Indicate on form "Non-Resident Alien"

Claim "one" (1) allowance.

Note: students from India can claim allowances like U.S. Citizens

FICA Tax Withholding
Social Security Tax (also known as FICA) is an employment tax. FICA must be withheld from wage payments for non-U.S. citizens who have been determined to be "resident aliens" for tax purposes and is deducted in two components: Old Age, Survivors, Disability Insurance or OASDI (4.2%) and Medicare (1.45%). FICA taxes will not be withheld from a student's wages when the student is registered for the appropriate amount of credits.

FICA TAX EXEMPTION FOR CERTAIN NONRESIDENT ALIENS: Students who hold F-1 or J-1 classifications are exempt from FICA tax withholding for the first five CALENDAR years they are in the U.S. Students that qualify as "nonresident aliens" should fill out the proper paperwork in the Payroll Office.

Note: the term "calendar year" refers to the period January 1 through December 31. If you are present in the U.S. during any part of a particular calendar year, that year will count as one calendar year of U.S. presence even if you were only present for a part of the year.

F2 visa holders are subject to Social Security and Medicare taxes

State of Michigan Withholding
In addition to the Federal Income tax-withholding, the university is required to withhold state income tax.

Local City Tax
Some cities within the State of Michigan assess an income tax to their residents. For example, residents of the city of Lansing are assessed a tax of approximately 1%. An additional form must be filed with the Payroll Office to request withholding from wages.

Tax-Filing
International visitors who hold F-1 or J-1 classifications (and their spouses and dependent children) must file income tax returns regardless of whether or not they receive wages or scholarship monies in the United States.

"Filing an income tax return" means completing the appropriate forms to report the income (if any) that you received during a particular calendar year. By completing the forms, you determine whether or not you have met your U.S. tax liability (if any) for the calendar year. Generally for each calendar year you are present in the U.S., you must complete and submit all tax returns by April 15 of the following year. In most cases, you will need to file at least two income tax returns per year, one with the IRS, and one with the state of Michigan. Nonresident aliens are required to complete IRS Form 1040NR, U.S. Nonresident Alien Income Tax Return (plus all applicable attachments).

TAX REPORTING DOCUMENTS ISSUED BY THE UNIVERSITY: The University is required to furnish certain tax-reporting documents to you. In most cases, you are required to attach these documents to your tax returns. If you were paid wages, and had tax withheld, the Payroll Department will provide you with Form W-2, Wage and Tax Statement by January 31 of the following calendar year. For international students that receive scholarship benefits or tuition waivers, the IRS Form 1042-S will be provided to you. In some cases, you may receive both a Form W-2 and a 1042-S, if you were employed as a student or graduate assistant and received scholarship benefits.

Tax Information
For more information regarding U.S. taxation of international visitors, you should consult the following IRS publications: Publication 519, U.S. Tax Guide for aliens, and Publication 901, U.S. Tax Treaties. International visitors may request copies of these publications as well as IRS forms and instructions, by calling the IRS forms hot-line at 1-800-TAX-FORM. For tax information, contact the IRS at 1-800-829-1040.